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Gatt Is On Its Feet But Far From Steady


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GATT IS ON ITS FEET--BUT FAR FROM STEADY

The scene was more suggestive of French bedroom farce than high-stakes trade negotiation. Inside Blair House, the elegant mansion across Pennsylvania Avenue from the White House, men and women darted from room to room, up and down halls and stairways.

The officials weren't cavorting. They were racing to avert an agricultural trade war threatened by a Dec. 5 deadline for imposing 200% duties on imported white Burgundy wines. As they worked, each new proposal on farm subsidies had to be carried to another room to be crunched on a laptop computer while top negotiators from the European Community and the U.S. huddled separately with their economists and lawyers. So frenzied were the talks that they continued even as EC trade ambassador Frans Andriessen and Agriculture Commissioner Ray MacSharry shrugged into their coats for their dash to Dulles Airport and their Brussels headquarters.

But the next morning, Nov. 20, a deal on gradual reductions in farm subsidies was finally consummated by a single telephone call from Andriessen to U.S. Trade Representative Carla A. Hills. President Bush hurried to the White House press room to announce that the 108-nation trade negotiations known as the Uruguay Round had suddenly sat up in bed--a year after most experts had pronounced it dead.

The reason for the haste: The Bush Administration wants to put its final imprint on a global deal before turning the White House over to Bill Clinton on Jan. 20. Bush reckons that the incoming Administration will have little time to do more than tinker with the Nov. 20 deal, since it must submit it to Congress by Mar. 3. Europeans are mostly amenable to the fast pace, fearing that Clinton might strike a harder bargain.

Although the six-year-old trade talks have been revived, there's little evidence that Bush or anyone else can keep them on schedule. The accord between the EC and the U.S. has cleared a major stumbling block, but many other contentious and complex issues remain unresolved in areas ranging from telecommunications to textiles to financial services. "Too many have been lulled into thinking that now that agriculture is done, it'll be clear sailing for the rest of the negotiations," warns Calman J. Cohen, vice-president of the Emergency Committee for American Trade, an association of 63 U.S. exporters.

TOO FLEXIBLE? The farm compromise must still be approved by 95 other members of the General Agreement on Tariffs & Trade, the Geneva-based sponsoring body. Then all the GATT members will have to pick up where they left off last December, when the agriculture dispute derailed the process. To remind them of where they stood, they'll have a 400-page summary of the tentative compromises that had been reached by then, compiled by GATT Director General Arthur Dunkel.

In coming months, angry agricultural interests may prove the least of GATT's worries. For now, French farmers, who depend on massive EC subsidies, are protesting noisily (box). French Prime Minister Pierre Beregovoy called the farm deal "unacceptable," and farmers stopped traffic in Paris with their tractors. Owners of more efficient American farms groused that the EC committed only to a six-year, 20% cut in internal price supports, and a 21% cut in the volume of commodities receiving export subsidies. And U.S. soybean growers, who triggered the crisis by complaining about European subsidies for oilseeds, griped that "we have been called on to be much more flexible than is fair."

But growers alone aren't likely to torpedo the talks. U.S. farmers actually gain more from the overall negotiations than they give up in the latest compromise. And gther food-exporting nations were delighted. The Blair House pact is "a historic step in bringing fair trade to agriculture," said Australian Prime Minister Paul Keating, leader of the 14-nation Cairns Group of food-exporting countries. And even if it wanted to sabotage the talks, France would find itself opposed by most of Europe, which is pushing for unity. The shaky European coalition has already been rocked by its failure to curb the fighting in Yugoslavia, by the instability of its exchange-rate system, and by the strain of persuading voters throughout the EC to approve the Maastricht Treaty for European union.

DRUG RELIEF. Even Japan, whose rice market is totally protected by strict quotas, may have to bend to international pressure. The worst that could happen under one GATT compromise under consideration: 3% of Japan's rice market would be thrown open to foreigners while the remaining market would be protected by a 700% tariff, phased down to 595% in 10 years. This "would present difficulties for Japan to accommodate," said Prime Minister Kiichi Miyazawa, though he did not rule out acceptance.

The money involved in farm disputes is piddling compared with some of the fights over services and manufactured goods. Not even industries within the U.S. agree. Take dumping. U.S. steel and auto makers want to retain strong protections against the below-cost sale of imports in the U.S. market. But U.S. exporters such as IBM, Caterpillar, and Sun Microsystems feel threatened by the growing use abroad of antidumping remedies. They worry that the draft compromise leaves in place too many rules favorable to Europe.

The U.S. pharmaceutical industry is divided, too. Antipiracy provisions of the GATT text would offer some relief from the rampant copying of drugs in India and Brazil. But patent protections would be phased in over 10 years, and none would be granted for pharmaceuticals currently awaiting regulatory approval.

That some resolution of the Uruguay Round (so-called for the location of its first meeting) will eventually be reached is not much in doubt. The real question is how many of the most difficult disputes will be put on the back burner, to be dealt with another time in another massive trade negotiation. Already, telecommunications and maritime issues are sliding in this direction. As the trade diplomats push to meet the newest deadlines, the most troublesome remaining issues are likely to follow.

TABLE: SLL ON THE TABLE AT GATT

TELECOMMUNICATIONS The U.S. is seeking to gain access for U.S. equipment and services by breaking down government telecom monopolies worldwide

FINANCIAL SERVICES The U.S. and the EC seek easier access to Third World markets for insurance, accounting, consulting, construction, and banking

INTELLECTUAL PROPERTY RIGHTS U.S. software companies, drugmakers, and movie and television producers want protection against piracy

TEXTILES Third World producers want a fast phase-out of import quotas protecting the U.S. market. The U.S. industry is opposed

SEMICONDUCTORS U.S. chipmakers want to lower Europe's 14% tariff

DATA: BWPaul Magnusson in Washington, with Bill Javetski in Paris and Robert Neff in Tokyo


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